With SP1 of Team Foundation Server a some performance issues related to Team Build were resolved and we saw some good improvements on the over-all build times. One fix relating to the size of the build log did not get corrected but that has now been fixed in the KB958845 hotfix as Aaron Hallberg describes in this post.
One thing I discoved was that SP1 didn't always replace the "Microsoft.TeamFoundation.Build.targets" file, I guess because the timestamp didn't match what the installer expected. As a result the issues with the build logger wasn't resolved at all. But with some help I resolved this by replacing the current file with the one from SP1 and it all worked beautifully.
If you have applied SP1 and the hotfix and still see "Project 'project' is building project 'dependent project' for targets 'GetTargetPath'" etc in your build log, open your "Microsoft.TeamFoundation.Build.targets" file and check that it contains the line <TargetsNotLogged Condition=" '$(TargetsNotLogged)' == '' ">GetTargetPath;GetNativeManifest;GetCopyToOutputDirectoryItems</TargetsNotLogged>. If not, get a correctly updated file from another machine running Team Build with SP1 (like for instance the evaluation VPC Microsoft distributes) and copy that over you own file.
When we finally got these issues sorted out we got nice results. One build was improved from a build time of 2h30 minutes before SP1 down to below 40 minutes. The size of the build log went from 5500 lines to 550!